Sirius XM SIRI is slated to report fourth-quarter 2024 earnings on Jan. 30.

Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at 63 cents per share, unchanged over the past 30 days, indicating a year-over-year decline of 30%.

The consensus mark for revenues is currently pegged at $2.17 billion, indicating a decline of 5% on a year-over-year basis.

SIRI beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, matched in one quarter and missed once, the average negative surprise being 41.69%.

Let’s see how things have shaped up for this announcement.

Key Factors to Influence Sirius XM’s Q4 Results

Sirius XM’s fourth-quarter 2024 performance is expected to have been negatively impacted by a range of challenges across its business segments.

SIRI’s advertising revenues have been facing significant headwinds due to the influx of Connected TV supply in the market. This has driven advertisers to allocate more budget toward performance-based products, leading to a decline in demand for digital audio advertising.

SIRI’s podcast inventory has also been falling short of expectations, further aggravating the decline in ad revenues. These challenges are anticipated to have persisted in the fourth quarter of 2024, weighing heavily on the company’s top-line growth.

SIRI’s agreements with Original Equipment Manufacturers have transitioned car trials from paid to free subscriptions. While this may improve profitability over the vehicle’s lifecycle, it is expected to result in a short-term decline in paid promotional subscribers, which is likely to have negatively impacted Sirius XM’s top line in the to-be-reported quarter.

Efforts to improve subscriber conversion rates from trial to self-pay remain a challenge. Sirius XM has introduced initiatives, such as personalized customer journeys, flexible pricing structures and enhanced content offerings to address this issue. However, these measures are still in the early stages of implementation and may not have yielded sufficient results to offset the expected subscriber declines in the fourth quarter of 2024.

Adding to these pressures is intensifying competition from streaming giants like Apple AAPL and Spotify SPOT, which is expected to have hurt its revenues in the to-be-reported quarter.

Apple is strengthening its position in its music streaming space backed by acquisitions of Shazam and Asaii. Spotify is also making efforts to expand its subscriber base with the help of its rich partner network.

SIRI is also facing unprecedented disruption in the automotive sector. The rise of electric vehicles (EV) and autonomous driving technology has enabled tech giants and innovative startups to challenge Sirius XM’s dominance in in-car entertainment. Tesla TSLA has been equipping its vehicles with its own entertainment system, bypassing the traditional satellite radio system.

SIRI Shares Lag Sector & Industry, Trading Cheap

SIRI shares have plunged 58.5% in the trailing 12 months, underperforming the Zacks Consumer Discretionary sector’s appreciation of 11.5% and the Zacks Broadcast Radio and Television industry’s return of 45.7%.

One Year Performance

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SIRI stock is cheap, as suggested by its Value Score of B.

It is trading at a discount, with a forward 12-month price/sales of 0.87X, lower than its median of 1.26X and the industry’s 3.71X.

Price/Sales Ratio (F12M)

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SIRI stock is also currently trading below the 50-day and 200-day moving averages, indicating a bearish trend.

SIRI Shares Trade Below 50-Day & 200-Day SMAs

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What Awaits SIRI in 2025?

Sirius XM faces intense competition in an increasingly competitive and rapidly evolving audio entertainment landscape, raising concerns about its future viability.

Nevertheless, SiriusXM is investing heavily in technological infrastructure, including a new tech platform and 360L technology that enables more targeted advertising. The company plans to have 40% of new car trial starts on the 360L platform this year, expanding to more than 50% in 2025. This technological advancement opens up new revenue streams, particularly in targeted advertising.

The company is doubling down on content strategy, particularly in podcasting. Recent high-profile acquisitions, including the Unwell network (home of "Call Her Daddy") and continued expansion of exclusive content, position SiriusXM to capitalize on the growing podcast market.

Why SIRI is Best to Avoid Ahead of Q4?

Sirius XM is facing multiple headwinds that are expected to have weighed heavily on its fourth-quarter performance. Declining advertising revenues, disruptions in the automotive sector and intensifying competition are likely to have pressured its top-line growth.

Its Growth Score of D makes the stock unattractive for growth-oriented investors.

Hence, it may be wise for investors to stay away from SIRI stock ahead of the fourth-quarter 2024 earnings announcement.

Sirius XM currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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